Now begins the time of year when local counties have counted up all the money they collected from real estate and property taxes, all the other fees, and all the money they didn’t spend in the fiscal year that ended on June 30. And inevitably, the counties wind up with more money than they budgeted for, even in these ”tough economic times.” So these “carryover funds” (or “closeout funds” in Arlington) are allocated to one-time projects, and they also are dumped in large amounts to reserve, or “rainy day,” funds.

Melissa Peacor, the county executive of Prince William County. Ready to defend herself against an angry mob of bloggers. (Prince William County)

In addition, Prince William isn’t posting the amount of carryover funds, typically around $30 million every year, until Friday. And the Board of Supervisors meeting to discuss and disburse this money is Tuesday. Some say that’s not very much time for the public to examine and have input on the spending of this seemingly sizable pot of cash.

I spoke to Melissa Peacor, the county executive, on Thursday, and she patiently explained the process, where all the money comes from and where it’s going. In Prince William, and in most counties, the bulk of the carryover funds comes from savings — money that was budgeted but not spent by government agencies — and is plowed into one-time projects already fully vetted by the board, Peacor said. This year’s grand total is $24.7 million, $19 million of which comes from agency savings, Peacor revealed.

Will Peacor and the board be able to calm the rising fears that they are collecting too much money and spending it unwisely? We’ll find out on Tuesday.

Fairfax will be doing its carryover of about $40 million next month, and Arlington has its closeout of about $18 million in October. But those jurisdictions don’t seem to be attracting the angst of Prince William, where widely read bloggers across the political spectrum — from Virginia Virtucon and Black Velvet Bruce Li on the right, to Moonhowlings on the left, to Al Alborn and the anonymous Sheriff of Nottingham somewhere in the middle — have all hammered the county for various aspects of its budget process. Former political candidate and CPA John Gray has been adding his close financial analysis as well.

It was these bloggers who helped provide the momentum that convinced the board in June to end their practice of disbursing their unspent office funds to pet causes around the county.

Now, the political observers wonder why a county collects more than it needs. And when it does so, why doesn’t it refund the overage to the taxpayers, as the feds do with income tax?

“Nobody expects them to return it all,” Alborn said. “But overcollecting these kinds of taxes is in fact an undocumented tax increase. And we already have the highest tax rate in Northern Virginia.”

Gray noted that large chunks of the carryover funds have gone to reserve funds with little transparency. “When do citizens get a chance to discuss this?” Gray asked.

Peacor, and county spokesman Jason Grant, both said that the extra money is used to pay for other county projects — information technology, building roads — that would otherwise require more tax money.

“If we say we need $5,” Peacor explained. “Wouldn’t you rather I spend $4, and take that $1 to fund the next year’s budget?”

Of the $24.7 million that will be carried over from last year’s budget, $1.9 million was from extra real estate tax revenue, and $19 million was from “agency expenditure savings”: money not spent by agencies. The remaining $3.8 million comes from extra fee and service charge revenue, Peacor said.

Now, the spending. The biggest chunk of the carryover money, $7.6 million, is plowed right back into budgeted activities. It is money the county is already relying upon, and is already planning on spending for services, Peacor said. Similarly, another $6 million is designated for projects that take longer than a year to complete, and so have to be funded in two separate fiscal years, Peacor said.

About $5.5 million is set aside for IT improvements in the county. About $2.2 million is being allocated to the “undesignated reserve fund,” a backup reserve fund for the county, which many counties, including Fairfax and Arlington, have, that has about $60 million in it. It is to be used for catastrophes only, Peacor said. But its existence reassures the bond market that the county is on solid financial footing, results in AAA bond ratings and lower interest rates. Peacor estimated the high bond rating had saved the county more than $30 million in debt costs.

In recent years, Prince William shipped as much as $10 million a year into a separate “revenue stabilization reserve fund,” which is used to fill budget gaps in recessions. The county started the fund when economic times were good and has dipped into it in recent years, Peacor said. It now has about $30 million.

Back to spending: The county board has already committed to spending $2.3 million on specific projects which were dropped from the budget in April. Peacor specifically mentioned the Rainbow Riding Center, a therapeutic horse-riding program on county-owned land in Silver Lake. It is set to receive $178,000 to pave its parking lot and other improvements, on top of $33,000 it received in April.

Rainbow Riding attracted attention because its former leader is married to Supervisor Wally Covington [who tried to give it $100,000 from his office account in November] and some felt it hadn’t gone through the same budget review as others. Peacor disagreed with that, saying it was fully examined by the board, and provided a service more cheaply than the government could.

About $1.1 million is left, which Peacor said was mostly targeted for park building or improvements.

Peacor said savings can’t be budgeted in advance because “you never know which agency the savings will come from.” And the $19 million in unspent savings this year is down substantially from previous years because of budget trimming, Peacor said.

When an agency doesn’t spend all its money, it goes back into a general pool to be used by the entire county. “There’s no ‘use it or lose it,’” Grant said. “You want to create a culture where the goal is not to spend all the money.”

By April, near the end of the fiscal year, counties have a good idea how much more money will be coming in by the time June 30 rolls around. So although the budgets for the next fiscal year are finalized in the spring, they know that more money will be available when all is said and counted after June 30. And that is taken into consideration in April, then used up in the carryover process, Grant said. It’s also used in April to set the tax rate — a rate that would be higher if not for the carryover money, Grant said.

A three-day window between when the carryover amount is announced and when it’s acted upon is not significant, Grant said, because the board has made its plan clear in April, and in the budget process over the prior months. “They’ve laid out the priorities for the county,” Grant said. “Once you have the money, you don’t change your strategies.”

Tom Jackman is a native of Northern Virginia and has been covering the region for The Post since 1998.

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